Business have become a bit shallow on the largecap side as focus has spread more to the broader marketplaces, says Sandip Sabharwal, consultant, asksandipsabharwal.com. At a go when there is a view that FII spurts may not be as robust as what they have been for a long time, FII dominated capitals which are not cheap which are not a clear bet on cyclical or the economic recovery have been the outperformers. Yesterday, there was a strong price action in Kotak Bank and HDFC Bank.I would not predict too much into it. In my view, some sort of rotation is taking place if some inventory does not perform for some time and then some fund comes in there. In fact, world markets have become a bit shallow including the largecap side as focus has spread more to the broader markets. A small amount of buying or F& O activity in these furnishes can take them up. No specific progress has happened which could be positive for them except for the fact that there is a general belief that when interest rates bottom out and start moving up, some of these banks with high cost on asset excellence, actually benefit from that. They have a high CASA ratio and their costs do not go up as much, whereas on the lend back, they can be priced higher as the RBI starts stiffening. Low interest rates and high affordability had given rise to a revitalization in the casing busines. You play games that by buying real estate properties capitals or dwelling improvement inventories. How are you approaching this? What have you added there last-place? In the dwelling improvement line-up, there are currently numerous each category of companies. On one side, “were having” the draw companies which did well in the initial season and now the government has relented because there are some input cost pushes etc. Then there are companies which cater to houses being built or improved. This includes sanitaryware companionships like Kajaria Ceramics etc. Kajaria Ceramics is a brilliant company and they have given very strong guidance for next year and that has been something which I have been positive about for several years. The tone of management is very good and they are debt free. They should do well near expression again. The challenge is that in the near term, these evaluations have become higher because everyone is focusing on these companies and they are not correcting when business rectify. The best approach is to accumulate gradually and keep on accumulating these companies on every plunge. There are some other corporations on the plywood area but I have not really looked at them. ET Now: You ought to have optimistic on gold for over a year and a half now. Do you think the trend is still intact after the recent correction? Or is a large part of the increases behind us? Sandip Sabharwal: At around $1,850, gold tolls should have peaked out for the near term but the target buying range is between $ 1,600 to $1,650 per ounce. That will be a good price level to get into gold because longer term, inflationary concerns are being underestimated at this stage really because inflation has not been there for some time. It does not mean inflation would not come back. It will come back because of the space the easy money policies and gargantuan fiscal stimulation are to be introduced and are sure to generate a lot of inflation. Gold frequently does is a good one in high inflation spans. The timing is slightly difficult to predict but over the next two-three years, gold should do is a good one. Coming to real estate, we have got Godrej Assets. The QIP is in the news but that apart, we have been hearing positive things on the segment. In words of return possible in the near term or even with an annual prognosi, how much scope is there in some of these counters? Some of the regions in play-acts — the Bangalore-based and Mumbai-based developers have had a strong up move. So, a lot of the positives are in. I would think that the best inventory at this stage in this segment is the largest real estate company — DLF. It still ogles undervalued relative to the improved fundamentals. Their strategy has been in terms of deleveraging their sector balance sheets and what kind of potential growth they might be able to show. There exist some upside left. Some of the regional actors can be bought on troughs because real estate is a long-term cycle and once the revival cycle starts , normally it previous a few years. The opportunity will come. It is still a awfully under owned segment of world markets. Most monies do not own many of these stocks or even though they are they own, it is in very small proportion. As the research results start coming out, the whole sector will still work better. So, beings have to look for opportunities both in terms of like corporations like Godrej Quality or business from Bangalore like Sobha Developers or look at Oberoi Realty in the premium segment or even some of the companies which take over contracts to make real estate campaigns. This part segment will do well over the next two, three years but we need to look at entry point because many of these inventories have run up very sharply.
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